CANADA FX DEBT-C$ holds steady as ECB dismisses speculation

Mon Aug 20, 2012 8:38am EDT
 
Email This Article |
Share This Article
  • Facebook
  • LinkedIn
  • Twitter
| Print This Article
[-] Text [+]

* C$ at C$0.9890 vs US$, or $1.0110
    * ECB cools talk about its bond-buying plans
    * Bond prices mostly lower

    By Jon Cook
    TORONTO, Aug 20 (Reuters) - The Canadian dollar was
unchanged against its U.S. counterpart on Monday as the European
Central Bank cooled speculation the bank was preparing to buy
bonds of euro zone countries if their borrowing costs rose over
certain limits.
    "It is absolutely misleading to report on decisions, which
have not yet been taken and also on individual views, which have
not yet been discussed by the ECB's Governing Council, which
will act strictly within its mandate," an ECB spokesman said on
Monday.
    Over the weekend, German magazine Der Spiegel said the ECB
is considering setting interest rate thresholds for any
purchases of struggling euro zone countries' bonds so that it
would buy such bonds if their interest rates exceeded a certain
premium over German bonds. 
    The Der Spiegel report had temporarily boosted the euro and
other growth-linked currencies such as the Canadian dollar
, which firmed overnight Monday to C$0.9876 versus the
U.S. dollar, or $1.0125. But gains were reversed after the ECB
comments.
    "The Canadian dollar really hasn't reacted that much to it,"
said David Bradley, director of foreign exchange trading at
Scotiabank.
    The currency, however, advanced against the euro, hovering
near last week's record high against the single currency
. 
    "Despite softness in the euro there's still plenty of
sellers around in the Canadian dollar," said Bradley.
    At 8:20 a.m. ET (1220 GMT), Canada's dollar was at C$0.9890
versus the U.S. currency, or $1.0110, unchanged from Friday's
close.
    Bradley said the Canadian dollar would likely remain within
a tight range between C$0.9850 and C$0.9910, citing weak summer
volumes and a lack of significant data.
    Minutes from the Federal Reserve's policy-setting meeting
will be closely watched this week for further currency
direction, while Bank of Canada Governor Mark Carney is expected
to speak at an event. Market watchers will look closely for any
change in the Canadian central bank's hawkish tone.
    Canadian bond prices were mostly lower. The two-year bond
 fell 3 Canadian cents to yield 1.210 percent, and the
benchmark 10-year bond slid 23.5 Canadian cents to
yield 1.971 percent.